Whither distribution and the channel? Two top Tech Data execs speak out

 Whither distribution and the channel? Two top Tech Data execs speak out 

On Thursday, Tech Data Canada held a Vendor Summit, with approximately 130 of its vendor partners at the company’s Mississauga ON headquarters. With Murray Wright, Tech Data President, the Americas, in town for the event, he and Tech Data Canada President Rick Reid shared their views on where the industry is headed, how Tech Data is responding to the changes, and how it’s all likely to shake out for their solution provider customers.Tech Data is reshaping its offerings to deal with the changes in the industry, placing a much stronger emphasis on virtualization and data center strategies than in the past, and adding a cloud strategy to its capabilities, but in spite of all the changes, their traditional business remains the core of their business.

“It’s just that the mix today is very different than several years ago,” Wright said. “Mobility, tablet, handheld devices. Our traditional business remains core but that business has changed quite significantly. And with every 1600 smartphones you need a new server. With every 600 tablets, you need a new server, and we are well positioned for that.”

“There is clearly a shift of value, Reid said. “Our configuration business has surpassed even our greatest expectations.” Tech Data’s strategy launched several years ago lets the country leadership devise their own strategies for execution in each market, so the strategies aren’t the same continent-wide. Canada for instance leads the entire Americas marketplace in configuration and integration. Telco-related opportunities, on the other hand, are much stronger in the US because of the different nature of the market.

Wright said their recently introduced StreamOne tool to manage partners’ software business has had good results.

“It positions us very well, by taking out some of the complexity, and giving VARs an easy answer,” he said. “Software is complicated. Resellers really have to understand what their customers are looking for and there are thousands of SKUs. We take out some of that complexity.”

Tech Data also announced its cloud strategy this year with the launch of TDCloud and the TDCloud Academy, a set of products, services, enablement tools and training available from Tech Data designed to help VAR customers better understand, find, develop and close Cloud opportunities. Wright said that while some see the cloud as a threat to distribution and to much of the channel, they see the cloud much more as an opportunity than a threat.

“Some think that the cloud will disintermediate distribution, but in the whole history of technology distribution, there have been several things that were supposed to do that — including managed services — and distribution has only gotten stronger,” Wright said. “We expect the same opportunities will exist with the cloud.”

Ironically, Tech Data’s cloud strategy has created much more of a strategic convergence with arch-rival Ingram Micro’s, Reid acknowledged. That’s a far cry from even a year ago, when Ingram Micro touted the value of its Seismic managed services division, while Tech Data denounced that kind of managed services strategy as something where a distributor could offer little value to justify its share of the profit pie. Now, with Ingram’s managed services becoming part and parcel of their cloud strategy, while Tech Data now having a cloud strategy of its own, the equation has changed.

“The role of distribution in the cloud will be different for both of us, but in the end, the results will likely be very similar,” Reid said. “Clearly the number of systems that are purchased in a hosted environment will lessen, and there is less equipment in a virtualized data center — but less can also mean bigger.”

While in the past, Tech Data has piloted some programs in Canada and rolled them out later into the U.S., Reid said that with the cloud programs, everything will be run out of the U.S. But he said that’s not necessarily a bad thing for Canada.

“It means that we can pick the best ideas, and let them run alone with the ones that aren’t the best,” he quipped.

Do VARs have to change their businesses or die out? Not necessarily, Reid said. Many will see their business prosper largely unchanged, especially if they live in smaller communities. But it’s likely different in major cities, he said.

“If they can’t offer some kind of hosting or data centre facility of their own, they will lose some of their business,” he said.

Many are adding managed services to their offerings, and that makes sense he said.

Successful VARs today pick managed services off a shopping list from the providers, and the SKU they are selling is just a managed services SKU, much the same as they sell other kinds of SKUs, Reid said. And this kind of hybrid managed services model seems a more sensible play.

“I don’t know how you can pay the bills as you grow in a pure play managed services environment,” he said.

Overall, Reid, a former reseller himself before he took the Tech Data job back in 1998, is still bullish on the channel’s prospects.

“There has never been a fantastic time to be a channel partner, but how many are getting out of it?” he said. “It’s always exciting. The number of resellers that we lose is miniscule.”

Ultimately, Wright said that a reseller’s success in this market today depends on their business skills.

“They have to run the business well,” he said. “There are lots of opportunities out there. They need to place their bets and focus on those with good ROI. Our role at Tech Data is to help them make those decisions.”

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